PRELIMINARY DOLLAR COST COMPARISONS OF SOVIET AND US DEFENSE ACTIVITIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000700110015-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 7
• Document Creation Date: December 12, 2016
• Document Release Date: October 9, 2001
• Sequence Number: 15
• Publication Date: October 31, 1975
• Content Type: MF

CIA/O~~t /MEM,Q.-RA
Df ~S~OV~~'~ :AND.'
 Approved For Release 2 0112/05 : CIA-RDP~8~T00608R000700110015-8
CEhl'[~~1L INTELLIGENCE AGENCY
WASHINGTON, D.C. 20505
31 October 1975
PgEMORANDt)M FOR: Mr. Andrew W. Marshall
Director of Net Assessment, OSD
Department of Defense
TnTashington , D. C. 2 0 3 O1
SUBJECT Preliminary Dollar Cost Comparisons
of Soviet and US Defense Activi~-ies
1. This memorandum transmits our latest dollar
cost comparisons of Soviet and US defense activities
together with two alternative comparisons requested
in your memorandum entitled "Teal Military Resource
Comparisons of US and Soviet Defense Expenditures,"
.dated 8 May 1975.
2. The new estimates of the dollar cost of
Soviet defense programs reflect changes iri the, price
base from 197.3 to 1974 dollars, in the Intelligence
Community estimates of Soviet forces and activities--
including major revisions in uniformed and civilian
manpower levels--and in the dollar prices applied
to individual weapon systems and prograr,.^,. They
do not incorporate changes indicated by our survey .
. of users, which is still in progress, or changes
implied by new budgetary information on Soviet
.spending in rubles, which is still undergoing evalu-
ation and analysis. At the present time we are
unable to matte a confident estimate of the m t etude
or direction 'vf the net effect of this new in or;na-
. tion and analysis on our dollar estimates. ~~~f!~~~jr~
~yy J
7{ J i^_
.s. As a resui~ or tnese uncerzainzies, we nave ~
less confidence in the precision of our dollar cost `~~~
re and them
estimates than we have had in. the past and g
as 'tentative. The usual caveats regarding their .
`_ ~ 016025
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meaning and propc~r use, of course, still apply. Esti-
mates incorporating the new information are currently
underway and will be completed in the spring. .
CIA Comparisons
4. The CIA comparisons are based on the same
dollar costing concept ar~d coverage of defense acti-
vities as in the past. At this point in time we Mill
believe that this is a more appropriate concept for
comparative purposes than those described in para-
graphs 7 through 11. The dollar costs are estimates
of what it would cost in the United States to develop,
deploy, and man a force of the same size, structure,
and technical characteristics as the Soviet farce and
. to operate that force as the Soviets do. With regard
to personnel costs, we use US pay and allowance rates
but do not include most of the dependent benefit- re-
ceived by US servicemen. Estimated retirement pay
reflects the statistical frequency of retirements
in the USSR rather than in the U5. No allowance is
made for the US practice of providing medical services
for retirees and their dependents. .
5. The US Department of Defense data used in
this comparison are from the January 1975 Five Year
Defense Program. DoD spending for military aid and
civil defense are excluded. Energy Research and
Development Administration (and Atomic Energy Commission)
expenditures related to nuclear weapons have been
added to the DoD data. The dollar costs of Soviet
programs are estimates of the costs of comparable
Soviet activities. Both the US data and the estimates
of Soviet costs have been converted into 1974 prices.
6. This year's preliminary estimate shows a
continuation in 1975 of the diverging trends in the
dollar costs of Soviet programs and US defense out-
lays. The estimated costs of Soviet programs in 1975
increased by about.5 percent while US expenditures
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declined by about 4 percent, both in constant 1974
dollars. As a result, the dollar costs of Soviet
programs expressed as .percent of US expenditures
increased from 125 percent in 1974 to 135 percent '
in 1975. If the costs of pensions, which add little
to current military capabilities, are removed from
both sides, the USSR/US ratio increases to about
130 percent in 1974 and to about 145 percent in 1975.
Alternative Definit~.ons
7. The two alternative comparisons that you
requested are intended to show the effects of 1) adjusting
the CIA concept to reflect US practices with regard to
' retirements and dependent allowances and 2) adjusting
both the costs of Soviet. programs and U5 expenditures
to exclude "explicit non-defense activities."
Reflecting US Retirement and Dependent Practices
8. The basic CIA concept in costing Sovie
retirement applies US retirement pay rates to an estimate
of the number and average grade at retirement of Soviet
. pensioners. For .this adjustment we have calculated
dollar pension costs by comparing the size of US and
Soviet career` force levels in the appropriatE time period
and applying the relative coefficient
(Soviet Career forces N 1.3) to US retirement expenditures
US career forces 1 ..
in each of the years 1962-75. Retiree medical benefits
were derived by applying the above mentioned 1.3 to 1
manpower ratio to US retiree medical benefits spending
in 1962 - 1975.
? 9. The basic CIA concept uses Soviet practices
regarding dependent allowances. The adjustment to reflect
US practices was made by applying US per man allowances
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for dependent housing, medical care and permanent
change of station (PCS) travel to the estimated Soviet
manpower levels. The US per man allowances are based
on information provided by OSD/PA&E'.
keflecting "Explicit Non-defense Activities"
10. This comparison is.intended to eliminate
from both sides activities which do not contribute to
military capability. The exclusions on the US side
were provided by OSD/PP.&E. They include such activi-
ties as: homeowner's assistance, Civil Air Patrol,
rifle practice, naval petroleum reserve, ait~il defense,
high school_ ROTC, Project Hire, G5A rentals and various
other environmer_tal, safety and EEO programs.
11. On, the So1ie?c side, we have excluded
the militarized security forces and an estimate of
~~ that ,port~.on of the costs of the construction .troops
~ ~ which ire dAvoted to civilian purposes. The costs
of the militarized security forces were deducted
? under this alternative since many of their. duties
are performe3 in the US by the Coast GL~.ard, state
police, and various other federal and state entities
?not funde3 through the DoD budget.
' ~ 12'. you will note that this mer.~orandum is
classifi~~:d Confidential becausF of the references
to the n,~w ruble information in paragraphs 2 and .1.
If these references are omitted, this memorandum
may be declassified.
25X1A
Attachment:
As stated.
RICHARD LEHMAN
? Director
Strategic Research
., .._ ._
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 Approved For Release 2001/12/05: CIA-RDP86T00608R000700110015-8
SUBJECT: Preliminary Dollar Cost Comparisons
of Soviet and US Defense Activities
Distribution:
Addressee
LDX - addressee
DIA
NIO con:
LDI
DDI Cong Liaison
SR/PFD
PA/C -.
PA/E
PA/M
25X1A
25X1A
25X1A
OSR/PA (31 Oct 73) 25X1A
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?
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30 October 1975
,
Preliminary Comparisons of Estimate% Dollar Costs of Soviet Defense Programs
and US Defense Expenditures
,
.
Billion 1974 Dollars
'~~
?ected
Pro
,
66
1967
1968
1969
1970
1371 -
1972
1973 1974
1975
1963
962
1
1964
1965
19
_
_
CIA Definif:ions
~
'
Total Defense Activities
i00 -102
107
~
4
88
91 ~
93
97
98
98
Soviet Programs ?
79
79
79
81
8
88
85 82
79
US Expf~nditures
89
90
87
85
103
109
111.
110
99 .
9U
Soviet as a percent of LAS
89$
88'$
91~
95$
82~
81~
8z~
85$
98v
109
111
118$..124$
135N
Excludinl~ Pensions
1
~
S5
9G
91
95
Adjusted Soviet Programs ~
78
?8
78
79
82
36
83
80 77
73
adjust{:d L'S Expenditures
88
88
85
82
100
106
108
106
95
~`djusted Soviet as a
129$
144
percent of adjusted US
Alternative. Definition: Dollar
89$
89~ ~
92$
96~
82~
81~
83~,
86~
100
112$
116
123
Costs cf S~wiet Programs Adjusted
to reflect US Retirement Practices
~
~
~?
and D~rend?~nt.Benefits
Total Defense Ac'ivities
~
4
98
100
10
1
6
l
,
x'
1
1
Adjusted Soviet Programs
83
84
85
8b
90
9
9
9
Ao
85
82
79?
US Expenditures
89
90
87
85
103
109
,111
110
9
0
Adjusted Soviet as a
129$ 137$
149
percent of US
Alternatives Definition: Soviet
93$
93~ .
98~
101
87~
86~
88~
91~
106$
118$
122$.
and US Totals Adjusted to Exclude
~
'
"explicit non-defense activities"
Activities
l Defense
t
T
92
93
93
95 97
102
.
a
o
77
80
83
87
89
~
d Soviet Programs
t
?5
75
75
~
7
85 82
8
e
Adjus
Adjusted US Expenditures
89
90
87
85
103
109
111
110
99
90
8
7
Adjusted Soviet as a
~
`
103
107$
112$ 118$
131
rercent of adjusted US
84~ 83$ 86$ 91$
78~ 76$
78~
81$
93
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